Gold breaks through 1750! FOMC dovish stance becomes key support, "bullish trend outlook remains valid"
After falling to around $1754 in the Asian market's morning session, gold prices are seeking a rebound. The precious metal remained range-bound on Friday (25th) due to low trading volume as the US market was closed for Thanksgiving. Given the market optimism, gold prices are expected to continue to rise and reach the important level of $1760. The US dollar index has been fluctuating below the 106.00 resistance level. Due to the Federal Reserve abandoning a larger-scale interest rate hike agenda at its December monetary policy meeting, the dollar is expected to hit a three-month low of 105.34. Meanwhile, S&P 500 futures rose slightly during the holiday period as the market remained optimistic. According to the minutes of the Federal Open Market Committee (FOMC) meeting, most Fed policymakers favor slowing the current pace of interest rate hikes, which could curb gold prices. On the other hand, ANZ Bank holds a different view. They believe that lower-than-expected US inflation led to dollar selling, which in turn boosted gold prices. This situation is unlikely to last, as the inflation rate is 7.7%, far above the central bank's target of 2%. "In the long run, it's not enough for the Fed to determine that the inflation rate will return to 2%." Goldman Sachs said that because the Fed will avoid a recession in its fight against inflation, the US 10-year Treasury yield will remain at or above 4% until at least the end of 2024. Praveen Korapaty, Goldman Sachs' chief interest rate strategist, said on a call: "Our forecast is based on the premise that the US economy will not fall into recession, and we believe that inflation will remain above the Fed's target. If the economy does not fall into recession and inflation is above the target range, the Fed is unlikely to ease monetary policy as the market expects." The 10-year Treasury yield above 4% has actually occurred for 23 days this year, all after the end of September. Before that, the 10-year Treasury yield had been below this level since the beginning of 2010. Data shows that interest rate swap traders are currently betting that interest rates will peak at just over 5% around June next year and fall to about 4.6% by the end of 2023. Korapaty predicts that the 10-year Treasury yield will reach 4.35% in the first quarter of next year, rise to 4.5% in the second quarter, and then gradually decline, but will remain at 4.05% until the third and fourth quarters of 2024. Gold Technical Outlook FXLeaders mentioned that gold opened favorably today, close to the team's initial target of $1765, with the EMA 50 providing continued support. Breaking the indicated level would confirm the bullish wave extending to $1786.50. Therefore, the bullish trend scenario will remain valid for the foreseeable future. Breaking 1746.40 marks the end of the expected rise and a return to the bearish correction track.
Time:
2022-11-27 16:19
After falling to around $1754 in early Asian trading, gold prices are seeking to rebound. The precious metal remained range-bound on Friday (25th) due to low trading volume as the US market was closed for Thanksgiving. Given market optimism, gold prices are expected to continue to rise and reach the important $1760 level. The US dollar index has been fluctuating below the 106.00 round resistance level.
The dollar is expected to hit a three-month low of 105.34 as the Federal Reserve abandoned a larger-scale interest rate hike agenda at its December monetary policy meeting. Meanwhile, S&P 500 futures rose slightly during the holiday period as markets remained optimistic.
According to the Federal Open Market Committee (FOMC) meeting minutes, most Fed policymakers favor slowing the current pace of interest rate hikes, which could curb gold prices.
On the other hand, ANZ Bank holds a different view. They believe that lower-than-expected US inflation led to dollar selling, which in turn boosted gold prices. This situation is unlikely to last, as inflation is at 7.7%, well above the central bank's 2% target. "In the long run, it's not enough for the Fed to determine that inflation will return to 2%. "
Goldman Sachs said that because the Fed will avoid a recession in its fight against inflation, the US 10-year Treasury yield will remain at or above 4% until at least the end of 2024.
Praveen Korapaty, Goldman Sachs' chief interest rate strategist, said on a call: "Our forecast is based on the premise that the US economy will not fall into recession, and we believe that inflation will remain above the Fed's target. If the economy does not fall into recession and inflation is above the target range, the Fed is unlikely to ease monetary policy as the market expects."
The 10-year Treasury yield above 4% has actually occurred for 23 days this year, all after the end of September. Before that, the 10-year Treasury yield had been below this level since the beginning of 2010.
Data shows that interest rate swap traders are currently betting that rates will peak at just over 5% around June next year and fall to around 4.6% by the end of 2023. Korapaty predicts that the 10-year Treasury yield will reach 4.35% in the first quarter of next year, rise to 4.5% in the second quarter, and then gradually decline, but will remain at 4.05% until the third and fourth quarters of 2024.
Gold Technical Outlook
FXLeaders mentioned that gold opened favorably today, close to the team's initial target of $1765, with the EMA 50 providing continued support. Breaking the indicated level would confirm the bullish wave extending to $1786.50.
Therefore, the bullish trend scenario will remain valid for the foreseeable future, and breaking 1746.40 marks the end of the expected rise and a return to the bearish correction track.
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